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An Insight into “Decision Tree Analysis”

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 World Wide Journal of Multidiscip linary Research and Development
WWJMRD 2017; 3(12): 111-115
www.wwjmrd.com
International Journal
Peer Reviewed Journal
Refereed Journal
Indexed Journal
UGC Approved Journal
Impact Factor MJIF: 4.25
e-ISSN: 2454-6615
Kapil Mittal
Research Scholar, Mechanical
Engineering, National
Institute of Technology,
Kurukshetra, Haryana, India
Dinesh Khanduja
Professor, Mechanical
Engineering, National
Institute of Technology,
Kurukshetra, Haryana, India
Puran Chandra Tewari
Professor, Mechanical
Engineering, National
Institute of Technology,
Kurukshetra, Haryana, India
Correspondence:
Kapil Mittal
Research Scholar, Mechanical
Engineering, National
Institute of Technology,
Kurukshetra, Haryana, India
An Insight into “Decision Tree Analysis”
Kapil Mittal, Dinesh Khanduja, Puran Chandra Tewari
Abstract
Decision making is a regular exercise in our daily life. One has to make decisions in their personal as
well as professional life on number of occasions but professional decisions affects whole
organization, both in terms of future of organization and achieving the goals that have been
embarked. One bad decision can ruin whole planning and preparation that have been made in
realizing the targets. That’s why decision making is termed as a tedious task. Thanks to our great
researchers who have explored some techniques as an aid to this challenging yet essential task. One
of those technique is “Decision Tree Analysis”. A decision tree is a graphical representation of
decisions and their corresponding effects both qualitatively and quantitatively. The structure of the
methodology is in the form of a tree and hence named as decision tree analysis. In this paper authors
describes the theory and history behind evolution of decision tree analysis along with its application,
advantages and disadvantages. Some examples have also been listed that shows the positive effects of
using decision tree analysis on productivity improvement under industrial environment.
Keywords: Decision Tree Analysis, Operation Research, Project Selection, Pre-planning, Project
optimization
Introduction
Decision tree is a type of statistical method performed via graphical representation of
decision making process under several specified conditions. It is generally used to determine
whether the decision made under given data is optimal or not? It is also used to scale the
decision after it has been made, as viewing its consequences under imagined conditions can
give one a learning of what to expect in similar conditions in near future.
History of decision analysis cannot be predicted accurately due to its nature and application
area. Humankind has been making decision since its evolution but in this paper only
industrial environment will be than into consideration. In industrial environment some data is
always available. It can be the historical data, survey data or any other type of data. Decision
making requires an analysis of the situation with the help of available data before giving a
final result. Frank P. Ramsey in 1931 was the first to develop a methodology of decision
analysis based on probability and utility. Major work in formalizing the decision theory was
done by John von Neumann and Oscar Morgenstern in 1954. They formulated a way to
define the utility by an assigned value and decision maker can easily chose the option with a
higher one. This is known as “expected utility hypotheses”. Another mathematician Abraham
Wald used game theory methods in statistical decision making successfully in 1950. Many
other mathematicians of that era backed the suggestions of Wald framework. After that
David Blackwell, M. A. Girshick and L. J. Savage contributed on a major scale by
combining the theories developed by Neumann and Wald. Once the theory was developed its
application began. In late 60s the theory was started to be known as decision theory, a more
application oriented name. Over the past 50 years revolutionary work has been done by
mathematicians around the world. Names include Frederick Mosteller, Philip Nogee, Milton
Friedman, Leonard Jimmie Savage, Ward Edwards, Donald Davidson, Kenneth R.
Hammond, Robin Miles Hogarth and many more. Case studies have been reported which
shows productivity improvement by focusing on a particular project (Kaushik & Mittal
Talking about industrial environment, various 2015b; Kaushik, Prikshit, et al. 2016; Mittal et
al. 2017b; Kaushik, Mittal, et al. 2016; Mittal, Tewari, Khanduja, et al. 2016;Mittal &
~ 111 ~
World Wide Journal of Multidisciplinary Research and Development

Prajapati 2014; Mittal et al. 2012; Kaushik et al. 2012;
Mittal et al. 2011; Kaushik et al. 2017; Mittal, Tewari &
Khanduja 2016; Kaushik & Mittal 2015a; Sharma &
Kadyan 2016a; Sharma & Kadyan 2015a). All the above
examples are detailed case studies that discuss the pathway
following different quality management technique which
ultimately led to customer satisfaction. Customer
satisfaction can be of many shapes i.e. quality
improvement, on schedule delivery, lower cost, good
service, improved maintainability and reliability etc
(Sharma 2017b) (Sharma 2017a). These case study must
have involved a project selection step which though not
discussed but must have been followed because there are
various projects available in an organization that can be
commenced. Project selection is also a decision making
process and so decision tree analysis can also help in
selecting a project for increased benefits. Here are some
more examples (table 1) that explains the use of decision
tree analysis in different circumstance that results in
improved organizational efficiency.

Table 1: Literature Review of Decision Tree Analysis

Sr.No. Author & Year Description

(Longbottom Calculated the firm's future resource requirement for two noncompeting
1 1973) refrigerated container product line,

Conducted a decision analysis for several conductors alternatives for anelectric

2 (Crawford et al. 1978)
transmission line
(Keeney 1979) Presented a multi attribute decision analysis approach for selecting a site for
3
pumped storage facility considering various measures
(Hobbs 1980) Explained the use of decision analysis in nuclear power plant site selection by
4
paired comparison methods
Explained a combination of decision analysis and optimization methods to
5 (Golabi et al. 1981)
evaluate solar energy project proposals
(Ronen & Pliskin
Used the decision tree analysis for the system reliability decision in a
6 1981)
microelectronics company
7 (Dyer & Lorber 1982) Evaluated the potential subcontractors for project planning purposes
Described the use of decision tree analysis in pricing of a newspaper industry and property litigation
8 (Higgins 1982)
problem of a food retailing company
9 (Kirkwood 1982 Conducted and explained a study on nuclear power plant site selection
10 (Bell & Brown 1984) Constructed a decision tree for selecting company's coal halting method
(Kirkwood&
11 Used the approach for the selection of bore hole plugging material for radioactive water storage
Sarin1985)
Used a multi attribute decision analysis approach in selection of a contract for the development of a
12 (Belton 1985)
computerized financial management system Analyzed a
13 labor contract bargaining strategy of a heavy industry under the state of uncertainty
14 (Allett 1986) Described the multivariate analysis for selecting a site for the coal mine
Described four processes for simplifying Decision Trees and compared their results from a variety of
15 (Quinlan1987)
domains
(Merkhoferm &
16 Presented a multi attribute decision analysis approach for selecting a site for nuclear waste disposal
Keeney 1987)
(Peerenbooj m et al. Developed a portfolio of environmental and health research programs for a synthetic fuel facility
17
1989) through decision tree analysis
Explained the various soft computing techniques like fuzzy sets, decision trees and Intended to remove
18 (Dote & Ovaska 2001)
the gap between their theory and practical implementation in industries
19 (Berger et al. 2004) Explained the use of decision trees in calculating the number of supplier in case of emergency situations
Used a combination of both Decision Trees and Bayesian Approach in developing a transformational
20 (Janssens et al. 2006)
model
(Sugumaran et al.
21 Used Decision Tree Analysis in feature selection in roller bearing
2007)
22 (Sakthivel et al. 2010) Used Decision Tree Algorithm in vibration based fault diagnosis in mono block centrifugal pump
23 (Dey 2012) Studied the classification ability of Decision Tree in a gearbox fault detection
(Saimurugan et al.
24 Used Decision Tree analysis in real time practical fault management
2015)
25 (Chenaru et al. 2016) Compare three techniques of decision making; fuzzy AHP and decision tree
26 (Mittal et al. 2017a) analysis giving the optimum results

Above examples shows the utility of decision tree analysis
in industrial environment. The examples shows how proper
decision making aid in the success of project. Above
examples can also be explained in terms of their area of
application. Here is the explanation:
1. Site Selection: Keeney in 1979 published an article
that discussed the selection of site for a pumping
storage facility using multi-attribute decision analysis
approach considering a number of alternatives and
~ 112 ~
measures. Hobbs in 1980 and Kirkwood in 1982
discussed the nuclear power plant site selection using
decision analysis approach. Hobbs also used paired
comparison method during site selection for better
applicability. Allett in 1986 explained the use of same
approach in coal mine site selection. Merkhoferm &
Keeney in 1987 described the nuclear waste site
selection again using the same approach. All examples
given above defends the use of decision tree approach
World Wide Journal of Multidisciplinary Research and Development
in site selection decisions as all projects later on were
successful.
2. Vendor Selection: In industries often a decision has to
be made about vendor selection for offloading some
parts for the purpose of cost reduction or unavailable
process. This is a very important decision as it affects
the overall quality and cost of the assembled part. Dyer
and Lorber in 1982, Belton in 1985 and Berger in 2004
have explained the successful use of decision tree
analysis in vendor/subcontractor selection that
ultimately increased the productivity.
3. Method/Process/Material Selection: It has also been
observed in the literature that method/process selection
is also done using decision tree analysis. Golabi in
1981 used the approach for choosing method to
evaluate solar energy project proposal. Bell & Brown
in 1984 selected a coal halting method and Kirkwood
& Sarin in 1985 selected a bore hole plugging material
for radioactive water storage. Sugumaran in 2007 has
discussed the use of decision analysis in feature
selection of a roller bearing.
4. Miscellaneous: Other uses of decision tree includes the
system reliability analysis by Ronen & Pliskin in 1981,
pricing of newspaper industry by Higgins in 1982,
selection and modelling for options of risk response
development by Dey in 2012, gearbox fault detection
by Saimurugan in 2015 and many more.
Above discussed examples shows the range of application
of the approach and its usefulness in industrial
environment.
Structure
Decision tree analysis, as name suggests, has a tree like
structure. Basically, it displays an algorithm under given
conditions. Many sequential problems and there effects are
considered before making a decision. In other words, it is a
type of flowchart in which at each point denotes a test &
it's corresponding result. The structure looks like a natural
tree where itsroot is decision making methodology,
branches as conditions & tests and leafs as the result. The
basic methodology of decision tree analysis is similar to
Bayes’ theorem where conditional probability is calculated
and decision is made on the calculated values. Therefore,
decision tree can be termed as descriptive means for
calculating conditional probability. In decision tree we
calculate different valueset at different nodes for
considering whether the path gives optimal decision or not.
Decision is deterministic or probabilistic in nature.It is
generally read from left to right.
Type of Nodes & their Functions
Various types of nodes are used in decision tree analysis,
these are described as follows.
Decision node-This nodehas a square shape. It indicates the
places where we have to select one out of various options.
Branches coming out represent available set of alternatives.
Chance node-This nodehas a circular shape.It symbolizes
that the event occurring is outside the thinking of decision
maker.
Terminal Node- This node has a triangular shape. It shows
final outcomes.
The branch coming out from decision node is called
decision branch which represents course of action and
~ 113 ~
branch coming out from chance node is called chance
branch which represents state of nature.
Applications
Decision tree analysis has many application almost in each
area where a choice has to be made from several available
alternatives. Apart from manufacturing industry the
application include social problems, business setups, and
service industry like banking, library and hospitals,
pharmaceutical industry all in all each small and big
enterprises (Sharma 2013b; Sharma 2012; Sharma 2013a).
Actually the success of any project/product depends upon
various decisions made during the production process.
There are various situations starting from the choice of raw
materials, vendors for sub-parts, machines, manpower,
sales and marking methods etc. where a decision is to be
made out of several available choices. Decision tree
analysis can help the decision maker by providing some
quantifiable terms. Some examples of the situations are as
follows:
1. Several simultaneous objectives: Sometimes a situation
may arise that one has to take in account the several
objectives from a single decision. This is a complex
situation for a decision maker as the outcome may
have an adverse effect on one aspect than other. In
these cases decision tree analysis along with other
tools such as fuzzy MADM can prove to be very
worthwhile.
2. Indirect benefits: It is matter of fact that human
intelligence increases with experience (Sharma &
Kadyan 2015b; Sharma & Kadyan 2016b). One can
visualize the direct benefits of the decisions but
indirect benefits are hard to predetermine. Use of
decision tree analysis helps decision maker choosing
right alternative that eventually helps with achieving
indirect benefits along with the direct ones.
3. Long terms goals: Decision making is generally
thought of a situational activity but a right decision can
also help in achieving long term goals of any
organization.
Advantages & Disadvantages
Apart from its simple to understand nature, decision tree
analysis can help any individual in achieving his goals by
aiding him in each aspect of personal and professional life.
It certainly help by providing a numerical value of the
various choices by taking into account all available
parameters. The data generated is justifiable and
presentable. Optimum decisions definitely results in higher
sales, increased profit, energy saving, optimum resource
utilization, decreased accidental losses and many more
intangible benefits.
Apart from many benefits, there are some risk involved too.
For example, inexperience of decision maker and unseen
situations like weather, recession, inflation etc. can deter
the optimum decision making process and can results in
false decisions. But looking at the many advantages over
the negligible and irrepressible circumstances authors
strongly suggest the use of approach in any industrial
situation.
Conclusion
In this paper along with the structure and history of
decision tree analysis, its range of application is discussed.
World Wide Journal of Multidisciplinary Research and Development
Which shows the wide operational area of the approach.
Decision tree represent decision making under uncertainty.
Optimal decisions can boost any process by minimize the
time and defects inherited in a process. Many approaches
are available for decision making purpose but decision tree
analysis is a virtuous approach due to its nature, easy to
applied methodology and strong justifiable results.
Therefore authors strongly suggests the use of this
methodology in case of decision making starting right from
the business selection. Use of these type of approaches
gives the user a confidence to move forward by helping
them in coming out of tough situations. As an employee, it
helps them to acquire the management confidence and as
an entrepreneur it motivates them by enhancing the
revenues.
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